Growlife Inc. (OTCBB:PHOT) Recovers on Strong Support from Investors
Last week wasn’t the best for the stock of Growlife Inc. (OTCBB:PHOT) especially when compared with the previous one. Still on Friday PHOT surged upwards by 11% and returned to price ranges above 31 cents per share. Traders once again showed confidence in the stock and throughout the day shifted 68 million shares, more than 3 times the amount from Thursday.
Despite the hesitant chart performance for the week PHOT was rather active announcing two new deals. First it revealed the interest purchase agreement with Creative Edge Nutrition Inc (OTCMKTS:FITX)’s subsidiary CEN Biotech. As per the terms of the agreement PHOT purchased 25% of the outstanding equity of the subsidiary from Wise Phoenix LLC and AJOA Holdings, LLC. PHOT will have to issue a total 235 million of its shares when the issuance conditions have been met.
The second deal curiously enough also featured the names of Wise Phoenix and AJOA Holdings but this time they sold to PHOT 40% of R.N.X.B., Inc. RNXB is described as an investment company dealing with the manufacturing and distribution of drugs while also in possession of agricultural systems that could be applied in the medical marijuana sector. Nonetheless RNXB has generated $27 million in annual revenues according to PHOT‘s CEO. For this acquisition PHOT will have to pay with 264 million shares.
For now the company doesn’t have the room to issue such vast amounts of shares and that is why a new increase of the authorized shares will be voted on the shareholder meeting scheduled for February 7. Still the 711 million outstanding shares will double based on these 2 deals and joint venture with CANX, which we covered in more detail in our previous articles.
If everything goes according to plan the two acquisitions will bring significant amounts of revenues to PHOT. Just the deal with CEN entitles them to receive a one-time payment of $100 million when sale volumes of CEN have reached 1 million pounds of cannabis. There still quite a lot of time till then and investors need to consider all the risks. Not to mention that the amount of dilution that has been planned may influence the stock of the company quite adversely.
The other industry leader – Medical Marijuana, Inc. (OTCMKTS:MJNA) had a slightly worse end of the week. Their stock dropped by 3% and closed Friday’s session at $0.36 per share.